Calis Beach and Fethiye Turkey Discussion Forum
Information and Services in Turkey Section => Banks, Interest, Money Transfers, Insurance => Topic started by: suehugh on February 26, 2015, 17:29:29 PM
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We have a pension pot to sort out. Not big.
Not sure what to do
Aged 60
Female.
Fixed annuity for life. (Reducing in real value because of inflation)
Life annuity, but linked to inflation. Starts off low, low.
Checked all the comparison sites and rang some companies. Think we have a good deal if we choose this particular route.
OR
Income drawdown. Defer pensions and just draw fixed amount each year within tax allowance. Look to invest in fixed bond or higher interest current account, or probably spend it.
Any thoughts from CBF Finance gurus
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Just make sure you remember any health issues you have had - as I went through the process about 3 years ago and although I have been in good health for most of my life and I knew poor health got you a better rate - I decided to mention - at the last minute to a "specialist broker" who had e-mailed me out of the blue - that I had a serious illness which paralysed me completely for a whole year aged 21 followed by 2 years learning to walk / move again but I was fully recovered and had been for 30 years :)
The outcome was a 15% increase in annuity payments!
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The annuity I got (before the possibility of taking the money out and doing what you like with it) gave a range of possibilities where you could set your own inflation parameters - eg. 0% (gives fixed rate), 2% (gives a bit less to start with but you get an annual top up), 5% (even lower rate at start up but a bigger buffer against inflation), and so on. One factor to consider is the impact of your state pension start date. When does yours kick in? That's how long you have to live on the annuity/investment alone. It may only be worth £500 a month and not enough by itself but it would sure boost what you can get from a £55k annuity.
P.S. You also have to calculate how long you intend/expect living - just to look on the bright side.
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With the pension changes coming you need to be very careful. The first question should be...what do you want in your retirement. Are you looking to continue to work or pass on an inheritance or are you looking to have a steady income. Also do you have any property.
Lots to learn and you need to be very careful as things like drawdown could very much work for you but the flip side is you get hit with a hefty tax bill. Balancing between the two, taking advantage of your tax allowance and investing for income might be another options but, as I say, it depends on what your plans are.
Personally I would recommend you take advice and not from a turkey forum. If you go here http://www.pensionsadvisoryservice.org.uk they are offering you a free consultation and are government backed. They can give you some facts about your options and put you in touch with a adviser if you would like to take the discussion further.
Hope this helps.
Why do I know some of this? Well I head up a online marketing team for a large wealth management company and we are about to launch our Campaign around this, look out for us in the Telegraph and Mail. The choices are complex, the risks are also high which is why any cost of advice could save you money in the long term.
Good luck with your retirement and your future plans
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Hi Colwyn
Sues pension can kick in end of March, or she could defer to take further advantage of the new rules.
The only benefit I can see from the new rules would be that Sue could get her mitts on all the pot tax free
25% is already tax free. The balance she could take over 5 years in lump sums not subject to the tax threshold. But what the heck do you do with the money. Invest yes, but Sue loves to spend. Returns on secure investments are not currently great.
The annuity would pay out the same amount but over a 20 year period. It would of course continue to pay out after this time .
The quotes for inflation linked were just silly. Plus I suppose our thought is the more money received at an earlier stage is more usable when we are fitter and younger.
Thanks for your input
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Hi Steve
We have already gone the advice route and actually had a skype type meet with an F.A.
He quoted a fee of £1300.0 which we thought was a lot. We know that there would also be additional fees
For instance, Sue has 3pots with three providers. We offered the total to each of them and ended up wth the best quote from a completely different alternate.
In each case there was a set up fee varying between 1 /1.5 % but included in the figures.
We using the Forum as a sounding board on this question Steve, and sometimes a bit of outside input can be helpful.
We certainly wouldn't sue the Forum for mis selling as Scunner would never pay.
Good luck with gearing up for the new era in Pensions.
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Put it all on red...
JF
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I am involved with this area and am actually authorised to give advive. In the past the "choice" was to buy an annuity. Annuities are now widely seen as poor value, due to low interest rates and longevity.
Added to that, the "fund" died with you.
There are now multiple options, and they can be quite complicated.
Yes, it is true that using Income Drawdown you could effectively strip out your fund tax free (assuming you have no other income), but why should you do that? The money is already in a tax-advantaged environment plus the death benefits could well be better where it is now.
Obviously I am not going to offer specific advice because I know virtually nothing about you, and what you should actually do is dependent on your personal circumstances and attitude to risk.The thing about paying for advice (the fee was not unreasonable IMO) is that you know that you will have had all options assessed and you are also protected if something goes wrong. If you DIY it, it could end up costing you far more than the 2%ish you've been quoted and you have no comeback if you make a mistake. It is also essential that you deal with an INDEPENDENT Financial Adviser as somebody working on behalf of one or a limited range of firms may not have all the options available.
The changes that have been brought in and continue to happen are designed to move people away from annuities. As far as I'm concerned, and I can only talk about me, there is no way on earth I would buy an annuity.
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Thanks villain.
We have just made an appointment with an FA to discuss. Still thinks it's costly, but we feel unqualified
To make a decision on our lonesome.
Hugh
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I have to agree with Steve and villian about getting independant financial advice.
As a retired ifa it never ceass to amaze me how people can ask for "any thoughts" on such a major issue as this.
Am glad you are taking professional advice otherwise it is jst like going down to the pub and asking the guy standing next to you what he thinks!
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Thanks
You shouldn't be amazed at what people ask for on CBF. The forum is made up of a diverse range if people from all walks of life and a wealth of experience in everything.
I would gues the demographic of members includes a majority of soon to be, or actual pensioners with actual experience of annuities. Indeed this thread revealed qualified practitioners in the art. And I have taken their advice.
We have also used this forum for know how on how to purchase property, to procure all sorts of services and to avoid a lot of pitfalls others have encountered .
Your further advice was appreciated
Hugh
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Thought you might be interested in this Which "Pension Wise Explained" guide that you can download or read online.
http://www.which.co.uk/documents/pdf/pension-wise-brochure-for-campaign-supporters-397375.pdf
Also... there is a Which petition to sign if you are concerned about any of the following.
"Pension pots could be at risk from poor value products and high charges.
Government pension reforms are set to give people more flexibility and control over their retirement savings. Over 55s will be able to access their pension savings as they wish and will not need to buy an annuity. For many these are welcome changes, but we want additional safeguards put in place so that all retirees can be confident they’ll get a fair deal.
Apart from the risk of scams, people could also be caught out in a pensions minefield of poor value products and high charges. The track record of the banks and financial services industry in this area is not good.
Which? research found that many pensions drawdown products contain charges that can vary wildly. For example, on one product we found that someone with a £36,000 pension pot could receive £10,000 less due to high charges. We think that your hard earned money should stay in your pocket, not end up lining the pockets of big companies.
We want to make sure that everyone who saves into a pension all their working life is able to enjoy a secure retirement."
This is the link to the petition
http://www.which.co.uk/campaigns/better-pensions/?utm_source=whichcouk&utm_medium=email&utm_content=endCTA&utm_campaign=pensionlaunch_seg4_060315
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Its always difficult to advise on the best way forward with pension pots. Every person has different needs at different times of their lives.
To give you an example - me:
I took ill health reitrement at 50 and got various options with my company pension. The rules had changed and I got offered a lump sum of about £66,000 which was very tempting and my 'advisers' head told me to take it and invest it. However my real life experience of people who had done this made me realise it wasnt for me. Many of them had either dipped into their lump sum or seen their investments lose money.
I was also offered the option of taking 66% of the basic State Pension with the proviso that they would take back 100% of the basic sate pension when I started receiving it (now a year later than it was back then).
So the options made me think. I took advice for my work mates and every one of them advised me to take the lump sum (all qualified advisers).
In the end I went for the maximum pension plus the 66% of my state pension (basing that bit on the fact that I might not live to retirement age and also the fact that the money would be more useful whilst we were young enough to enjoy it).
Anyway - 10 years on I don't regret it one bit. I now have a pension that has grown pretty well through the RPI indexing it comes with and when I eventually receive my State Pension I know I will lose the basic part but will still have a small increase due to any SERPS or additional pension I have paid in.
Now to my latest problem. I got made redundant the other week and decided that as I'm coming up to 60 it might be a good time to retire fully. I'm in the postion of having a personal pension worth around £50K and what I think what's right for me now is to leave it until next year and then start drawing from it (up to my tax free allowance). This should virtually replace my part-time wages until I reach retirement.
I looked at annuities and they will just not pay enough. If I want them to increase they will start much lower and basically at least 50% of it will die with me (if i set it up that way).
So it really is horses for courses and what your gut feeling is regarding taking lump sums, annuties or whatever.
Good luck making your decision.
ps - Colwyn - I'm not 100% certain but I'm pretty sure even with the new rules you cannot take the whole of the fund tax free. I'm sure someone will confirm that for me :)